Daily ETF Watch: Edelman Brainchild Soars

An ETF Ric Edelman helped inspire gathers mega assets in its first week.

Managing Editor
Reviewed by: Olly Ludwig
Edited by: Olly Ludwig

The splashy launch this week of the iShares Exponential Tech ETF (XT) owes its immediate success to star financial advisor Ric Edelman, who was instrumental in persuading iShares to launch an ETF focused on a collection of high-tech firms and in plowing more than $500 million into it on the second day.

Edelman allocated shares of XT to virtually all his clients, seeing it as a necessity in terms of full exposure to the global equities opportunity set. Most of the $563 million now in the fund can be traced back to Edelman Financial, which has about $14 billion in client assets. The assets now in XT amount to nearly 4 percent of Edelman Financial’s client assets.

The fund is full of companies that produce or consume technologies that Edelman believes are going to be crucial to the world economy in the future. Themes such as “big data,” bioinformatics, 3-D printing, nanotechnology and various and sundry takes on energy are collected in one ETF. Edelman was keen on championing a fund that defines “technology” as a lot more than just information technology.

ETF.com Chief Investment Officer Dave Nadig, gesturing with qualified excitement toward the new ETF, argued in a blog that the fund isn’t new in the sense that the investment industry’s focus on “new economy” companies has been going on for more than a decade. But what is noteworthy is that the new fund is another feather in the cap for indexing, as the theme is now in a cheap and transparent wrapper.

XT, based on an index created by Morningstar, has a total of 200 constituents from around the world. It has an annual expense ratio of 47 basis points, or $47 for each $10,000 invested—hardly exorbitant for a niche ETF, Nadig stresses in his blog.

Olly Ludwig is the former managing editor of etf.com. Previously, he was a financial advisor at Morgan Stanley Smith Barney and an editor at Bloomberg News. Before that, Ludwig was a journalist at the Reuters News Agency in New York.